TaxTMI 
TaxTMI 
2011 (5) TMI 703
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.... Compagnie (hereinafter referred to as "ESS"). One of the agreements appointed the Appellant as a representative of ESS in India to solicit television advertising on the Channels broadcast by ESS. It appears that appropriate service tax was paid for services under this contract and the matter is not before this Tribunal in this proceeding. Another agreement is for distribution of the ESPN Network Programming Service and the Star Sports Network Programming Service (hereinafter referred to as "the channels") in India and Nepal via Cable Television system, Satellite Master Antenna Television System and Direct-to-Home via Satellite. The agreement also covers distribution to sub-distributors who may make available to the customers. This is the impugned contract in this proceedings. The Appellant collects subscription fees from the subscribers or from the sub-distributors for providing access to channels. 3. The main objective of the agreements is stated in the preamble of the agreement itself as the distribution of the channels in India and Nepal. The Appellants submit that they were required to pay 65 per cent of the total revenues, after deduction of income-tax at source, co....
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....s head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organization, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner." After the Amendment of 2005 "Broadcasting' has the meaning assigned to it in clause (c) of section 2 of the Prasar Bharati (Broadcasting Corp of India) Act, 1990 and also includes programme selection, scheduling of presentation of sound or visual matter on a radio or a television channels that is intended for public listening or viewing, as the case may be; and in the case of a broadcasting agency or origination, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic ....
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....en the theatre owner and the distributor is on revenue sharing basis i.e. a fixed and pre-determined portion i.e. percentage of revenue earned from selling the tickets goes to the theater owner and the balance goes to the distributor. In this case, the two contracting parties act on principal to principal basis and one does not provide servile to another. Hence in such an arrangement the activities are not covered under service tax. 2.5 The matter has been examined. By definition 'Business Support Service' is a generic service of providing 'support to the business or commerce of the service receiver'. In other words the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider. In the instant case the theatre owner screens/exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity on its own accord. That being the case such an activity cannot fall under 'Business Support Service'." 8. Their third submission is that the activities of a distributor cannot be considered as promotion or marketing of services. They argue th....
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....ow much attention to pay to each of the give sub-categories and how much money to budget of each. A promotional plan can have a wide range of objective, including sales increased, new product acceptance, creation of broad equity, positioning, competitive realizations or creation of a corporate image Fundamentally, however, there are three basic objectives of promotion. These are (1) to present information to consumers as well as others (2) to increase demand and (3) to differentiate a product." 12. He further submits that for 4(a) and 4(b) of contract dated 1-4-2003 clearly says the nature of the activities and the remuneration paid for the activity. These clauses are reproduced below :- "4(a) Distributor shall pay 60 per cent of its total gross revenues to ESS Distribution (after deduction of Income-tax at source under the Income-tax Act, 1961) as consideration for granting of right to distribute the Star Sports Service in the area. For the purpose, gross revenues shall mean the amount due to the distributor from distributing the Star Sports Service in the area as recued by any taxes that are withheld in the area. If pursuant to the applicable tax law....
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.... He argues that the fact that the service was specifically covered by the amendments in "Broadcasting Services" with effect from 16-6-2005 cannot mean that the services as detailed in their contract was not covered by any other entry for the earlier period. He also argues that payment of service rendered can be in different ways and retaining a part of the amount collected from the ultimate consumer is a proper payment. It is not like a case where the goods are bought by a distributor and then sold to consumer. 14. He also argues that the party was not willing to produce copies of all the contracts executed by them but only when considerable pressure was brought upon them to do so they produced the documents. He argues that this fact clearly shows that there was a lack of bona fide. He also points out that for the initial period of one year, there was no revenue sharing agreement and the revenue sharing agreement was executed later. He relies on their letters dated 2-2-1995 and 7-3-1995 to prove that there was active suppression. 15. We have considered the arguments of both the sides. 16.1 The argument raised that the impugned service rendered by the Appellan....
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....on maintained was that the cost of space or time for carrying advertisements in print or electronic media was not covered by the entry for service of Advertising Agency. In 2001 legislation was made to tax the cost of time slots for advertising in electronic media under the services of Broadcasting Agency. In the circumstance the Tribunal ruled that the impugned service was not covered under the tax net prior to 2001. This ruling cannot be extrapolated to mean that if a service is specifically covered under one entry from a specified date that service could not have been covered by any other entry before the specified date. We are not able to agree with this argument without examining the other aspects relevant as pointed out above. 16.5 However the opinion canvassed by the Appellant is seen to be expressed in para 3(e) of the case of Glaxo Smithkline Pharmaceuticals Ltd. (supra). 17. The next argument is about revenue sharing. The Board's circular dated 23-2-2009, quoted was in the matter of revenue sharing agreement relating to a situation wherein a theatre owner and a film producer enters into a contract for exhibiting a film on the basis of a revenue sharing agreem....